Apple's Earnings Beat Was Mostly a Gift From Trump's Illegal Tariffs

MarketDash

Jul 31, 2:45 PM • 1 hour ago

Apple beat earnings estimates for the 15th straight quarter, but a big chunk of that beat came from tariff refunds. Here's how that happened and what it means for Tim Cook's relationship with the president.

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Apple Inc. (AAPL) did it again. The tech giant beat analyst estimates for both revenue and earnings per share for the 15th straight quarter on Thursday. But here's the twist: a big chunk of that beat didn't come from selling more iPhones or Macs. It came from a refund on tariffs that the Supreme Court said were illegal.

Apple Q3 Earnings

In a statement, the company attributed 11 cents per share in earnings coming from tariff refunds. Doing the math, that means as much as 85% of the 13-cent per share earnings beat came from tariff refunds. Without that one-time benefit, the beat would have been just two cents per share.

"Company gross margin was 50.1 percent, including a favorable impact of approximately 2 percentage points from tariff refunds. Diluted earnings per share was $2.02, up 29 percent year over year, and included a favorable impact of $0.11 from tariff refunds," Apple said.

Supreme Court Ruling Against Trump's Tariffs

In February, the United States Supreme Court ruled against President Donald Trump's tariffs, saying the import levies were illegal and unconstitutional because the president lacked the authority to unilaterally impose them. The president had previously issued tariffs of various percentages on various countries around the world.

This included rates above 40% for Vietnam and China, which hurt Apple. The company was able to navigate the tariffs by shifting some production to India, which had a lower rate, and to CEO Tim Cook lobbying the president on global trade.

The White House later excluded certain items and sectors from the tariffs, which helped protect Apple from higher prices and lower margins for its important revenue-driving iPhone and other products.

Former Wedbush analyst Dan Ives previously argued that Apple CEO Tim Cook might need to lobby Trump after new tariffs were placed on countries after the Supreme Court ruling. Ives said Cook's role had shifted from being 10% politician and 90% CEO to a new range of 25% politician and 75% CEO due to the tariff battles.

Ives said Cook's ability to navigate the supply chain concerns could be his "Hall of Fame moment" for his legacy with Apple.

Apple's Fine Line With Tariffs

Apple and Cook have a positive relationship with President Trump, which may bring a surprise that the tariff refund impact was so large in the quarter.

Apple was mentioned as one of several companies that may not seek tariff refund reimbursement this year, which led to Trump saying he would "remember" the companies that didn't go after refunds.

The earnings report shows Apple did go after tariff refunds, a move that could create some tension with the president.

Cook, who is set to move on from the CEO role at Apple on Sept. 1, is set to become the Executive Chairman and still maintain some political interference control for the technology giant.

"As executive chairman, Cook will assist with certain aspects of the company, including engaging with policymakers around the world," Apple said.

Cook once attended the White House to present a 24-kt gold-based plaque to Trump. This "gift" happened around the time Apple landed a tariff exemption, and became a punchline on an episode of "South Park," which made fun of business executives lavishing Trump with items.

Cook also attended Trump's private screening of the "Melania" documentary, along with political leaders and other business executives.

In October 2025, Trump showered Cook with praise in front of other business leaders. "You've done more than the entire group here," Trump said at the time.

Apple rewarded shareholders with an earnings per share beat thanks to the tariff refunds. Time will tell if this move changes anything between the relationship of Cook and Trump.